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LAS VEGAS-The gain on the sale of Treasure Island pushed MGM Mirage from a first quarter loss to a profit of $105.2 million, the company said late Monday. The operator of 10 casino-resorts on the Las Vegas Strip produced earnings of $0.38 per share–down from $0.40 in the same year-earlier period–thanks to a $0.44 per-share gain–net of tax–on the sale of Treasure Island. The sale closed last week with buyer Phil Ruffin paying off the outstanding $175-million, 10% note early for a discounted price of $155 million, bringing the total sale price to approximately $755 million.

Occupancy, after falling precipitously in Las Vegas in January and February was back up to 95% in March. Convention cancellations forced the company to replace the room nights with leisure travelers at lower rates during the first quarter. As a result, revenue per available room fell 34% to $102 compared to $154 in the first quarter of 2008 and the average daily room rate was down 30%. Net revenue decreased 20% to $1.5 billion.

Hotel revenue was down 31.5%. Retail revenue was down 25%. Food and beverage revenue was down 16%. Entertainment revenue was down 12%. Total casino revenue declined 16% with slots down 12%. Table games revenue, excluding baccarat, was down 20% while baccarat was down only 1%, a sign that the higher-end gaming segment is holding up.

“The first quarter was clearly challenging for all Las Vegas operators,” company president Jim Murren told analysts. “In fact, it was quite brutal early on.”

Looking ahead, Murren said RevPAR in April was down 30% year-over-year, which is a 400 basis point improvement from March. In addition, average occupancy in Las Vegas in April was up to 97%, which marks “the first time in a while” that occupancy was not down on a year-over-year basis. That allowed the company to increase its minimum room rate for the first time in several months, which–when combined with operational savings–should produce better margins going forward, he said. Convention business has been improving in recent weeks, but will be down from 2008 by approximately 25%, he estimated.

“We’re not out of the woods; things are still tough; there’s not false hope,” he said, “but we think we’ve seen the worst of things and that we have the tools in place to see gradual improvement in ’09 and significant improvement in 2010.”

Meantime, the company last week solved the final funding conundrum for its 18-million-square-foot CityCenter development and continues to pursue a solution to the company’s $13.5-billion debt load. It now has until the end of June to reduce its debt thanks to another default waiver from lenders last week related to the new CityCenter agreements. Murren told analysts the CityCenter solution will ultimately lead to a larger solution to its capital structure.

MGM Mirage EVP/CFO Dan D’Arrigo told analysts that all options for solving its high debt load are still on the table. Asset sales would only be a part of the overall solution, he says, but added that the level of interest in many of its casino-resort assets, including its Detroit and Mississippi properties, is “extremely high” such that there would be no need to sell for a discount.

Over the next couple of weeks the company will look at different scenarios that the company, its advisers and lenders have come up with over the past few months for righting the company’s balance sheet, he says. The two or three plans that make the most sense will then be delivered to the board of directors.

“Once the board opines, we will make it public,” he says. “My guess is that will be well before our June deadline, maybe even the end of this month.”

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